South Korean companies' investment in China declined 43.7 percent in the first seven months of this year amid a prolonged diplomatic dispute over the deployment of a U.S. missile defense system, central bank data showed Sunday.

Their direct investment totaled US$1.75 billion in the January-July period, down from $3.11 billion in the same period last year. The sharp drop compares to moderate 1.2 percent and 3.7 percent declines in investments by the European Union (EU) and Japan, respectively, according to the data from the Bank of Korea (BOK).

Recently, South Korea's retail giant Lotte decided to sell its discount store chain in China as Beijing stepped up economic retaliation against Seoul over the deployment of the U.S. Terminal High Altitude Area Defense (THAAD) battery on its soil.

Despite repeated assurances from Seoul and Washington that the THAAD system is designed only to defend against North Korea, China has long voiced opposition to the deployment of THAAD in South Korea, arguing that it hurts its security interests.(Yonhap)